Economic Growth Slows To Half-trot

Consumers Seem To Be More Concerned With Cutting Debt Than With Making Major Purchases.

April 30, 1993|By Jack Snyder of The Sentinel Staff

Hindered by a steep decline in defense spending and a cutback in consumer purchases, the U.S. economy's growth rate slowed dramatically to 1.8 percent in the first quarter, the Commerce Department reported Thursday.

The first-quarter growth in gross domestic product - the sum of all goods and services produced nationwide - was in sharp contrast to the fourth quarter of 1992 when a consumer holiday spending spree helped boost the rate to 4.7 percent, a five-year high.

But this year, economists noted, consumers seem to be more focused on paying off credit-card bills than making new purchases.

Economist Norman Robertson, a professor at Carnegie-Mellon University in Pittsburgh, said the first-quarter GDP growth does not imply ''we are on the threshold of another recession. It illustrates the unevenness and lack of consistency of this economic expansion.''

David Scott, University of Central Florida finance professor, concurred. ''We've had eight consecutive quarters of growth,'' Scott said. ''It's just not the sort of growth that excites.''

Scott predicts that GDP growth for the year may end up between 2.5 percent and 3 percent. Last year, GDP grew 2.1 percent.

President Clinton said the first-quarter report ''proves we were right'' in trying to pass a $16.2 billion economic stimulus package. That effort was blocked last week by Senate Republicans.

However, Senate Republican leader Bob Dole of Kansas said the president's ''tax and spend'' policies are depressing the economy by ''scaring a lot of Americans: businessmen and women, consumers and investors. The American people are grading the president with their pocketbooks.''

In another economic report Thursday, the Commerce Department said new home sales rose 4.8 percent to a seasonally adjusted annual rate of 637,000 in March, despite a severe East Coast storm. However, declines in the Northeast and South were offset by jumps in both the Midwest and West.